USA – TEXAS Law and Practice Contributed by: Taylor Cooksey, Philip Kinkaid, Serena Kramer and David Brooks, Cokinos | Young
2.10 Taxes Applicable to a Transaction In Texas, there are nominal filing fees that vary from county to county and are applicable to the filing of any documents in the real property records. However, real estate transactions are not subject to transfer taxes, document, stamp or similar taxes or fees. Similarly, Texas does not impose any transfer or similar taxes or fees on transfers of shares in entities, including entities owning real estate. 2.11 Legal Restrictions on Foreign Investors Foreign investors must comply with any applica - ble US federal laws. Texas law, however, does not impose any restrictions or requirements on foreign investors purchasing Texas real estate. Commercial real estate financing can be struc - tured through a variety of methods, including traditional bank loans, private investor financing and seller financing, each secured by property being acquired or developed. Financing may also include mezzanine loans or mortgage- backed securities, particularly with a portfolio or equity transaction. Each method of financing has varying terms depending on factors such as the type of lender, the loan size, the borrower’s creditworthiness and the type and risk of the investment. 3.2 Typical Security Created by Commercial Investors In Texas, a deed of trust (which is a mortgage instrument) is the document used to grant a lien in real property. The lien is granted in favour of 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
the lender as security for payment and perfor - mance of the borrower’s obligations. Technically, a deed of trust is granted to a trustee for the benefit of the lender. The trustee’s role is nominal, unless the borrower defaults and the lender exercises its remedies, in which case the primary role of the trustee is to conduct the non- judicial foreclosure sale of the property. To be effective against third parties, the deed of trust must be recorded in the county records. Like a deed or any other document to be record - ed, it must be executed and acknowledged before a notary public (or otherwise proved according to law). The lender will also typically take a security inter - est in tangible and intangible personal property located at or relating to the real property being acquired or developed. This may be created in the deed of trust or by a separate security agree - ment. The security interest is perfected by the filing of a UCC-1 financing statement. If the property is or will become income-pro - ducing, the lender will typically also secure the loan with an assignment of rents, which can be included in the deed of trust or created by sepa - rate instrument. If a mezzanine loan is involved, equity ownership in the borrower will be pledged to secure the loan, evidenced by a separate security agree - ment. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders Foreign lenders must comply with applicable US federal laws, but there are no specific legal restrictions on foreign lenders being granted
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